Yeah. So good morning, everybody. I'm very happy to present to you together with Benoit and Shreedhar, our first half results. So, I will make the introduction and the highlights Sreedhar will go a little more into the details on the numbers. Benoit will update you on where we are on our Transform and Grow program.
And I will come back for the wrap up and the outlook. So first of all, I want to say that they are and you will see that in the presentation, the number of changes in this presentation. It's the first time that we report the numbers with our new organization so Angela will go that. All our numbers are including the impact of IFRS 16 and we have we have changed our numbers in 2018 'nineteen. So, everything is after IFRS.
And third, you will see that our new CFO and listening to some input from you has changed a few definitions. So, they are on a few definitions that we are using and we will comment on them which have changed from the what we were doing before based on your input. So the first half has been good for Saint Gobain and I'm very pleased with our results with a good sales growth. You see a sales at 21,700,000,000, up 4.3%. And 3.5% from a like for like perspective supported by a good trends in the first half.
Our operating income is up 8.2 percent at 1,638,000,000 which is giving a 8.3% increase like for like and it's important to noticed that our operating margin is up 30 basis points from 7.3to7.6percent. The recurring net income is up 16.7 percent of a given good performance on below operating income items at 944,000,000 and the earnings per share are going up more because we have continued our program of buying back shares. So, we've bought back 6,000,000 shares that we canceled. So, there is an additional impact there. The EBITDA and EBITDA, which is a new definition and I will let and Shreedhar going to it is up 8.4percent@2.4000000000 and the debt which is also including the changes with the IFRS 16 is at 1,000,000,000 and the ratio is 2.6 times, which is put us comfortably where we want to be in terms of a rating.
The main highlights of this first half. First, a good organic growth at 3.5 with good pricing at 2.2%. Shreedhar will come back on that. This is driven by all geographies and I would say that globally supportive market plus clearly in a number of areas, some over performance of Saint Gobain in the first half. A good impact of the sales on our bottom line on the operating profit.
So, 8.3 sound like for like. We have benefited from our change in the organization. As you remember, we had also last year a few operational issues, which were impacting our results in the first half. So, we have also a more, I would say, normal industrial performance. And again, of 330 basis points, which I think is bodes well for the future.
We I am very pleased with the first results of our transform and grow programs. The organization has been in place, 1st January and we are ahead of our targets on most items. Benoit will we'll explain that in more details. We have a few already which was very early in some countries. We have already on additional growth because of the synergies of the new organization.
We are ahead in terms of the targets, in terms of saving. So, which allows us to increase the impact on the 1st year of this plan from 50,000,000 to more than 50,000,000 to more than 80,000,000. And in terms of portfolio, we are going to be above the 3,000,000,000 sales by the end of twenty 2019 in terms of divestment, we have already signed for a 2,800,000,000 more than 1,000,000,000 of sales and we have a number of projects underway. Free cash flow and this is again a new definition that that that we are using now that I think is more aligned with the way you look at it is at 40% versus the first half of twenty 18 and the net income, as I said, is up significantly. So, a very good set of results, which shows in values that Saint Gobain is in terms of is overperforming at the moment on reasonably good markets, better than probably some people who are thinking at the beginning of the year in line globally with what I had in mind in February, but I would say that good overall market and a good start of our transformation plan.
So now I leave Shreedhar go into more details in these results.
Thank you, Pierre Andre. Good morning to all of you. As Pierre Andre said, we have made quite a number of changes in this presentation. And not just the format, but also some of the indicators, and it's based on the inputs you all gave us during the last 6 months. The purpose of making these changes is not just to align the reporting in line with the way we brand the business in the organization but also to make sure that we help you to understand our results better.
So, let me get into the details. Starting with sales. Sales increased by 3.5% on a like for like basis over the first half. And 4.3% on a reported basis. With the positive impact from the exchange coming primarily from the US dollar in the whole sales.
The impact of acquisitions is slightly more than various divestments that we did in the transformation program. Even though we made fewer acquisitions during the first half, we will continue to evaluate various options of acquisitions in a disciplined manner. If you look at the quarterly trend of price and volume, you would clearly notice here that we had remained focused on price in spite of given the fact that there was a lower trend in the inflation and and clearly, it has helped us to offset the inflation, not only offset the inflation, but also have the price, the spread between the price and inflation positive. And this is very important for us to make sure that continue to remain focused because we saw inflation in the first half. Even though it was relatively lower than the last year, and we expect the few raw material trends to be lower in the next in the second half.
Overall for the year, at this point of time, our best estimate of the input cost inflation would be in the range of 4.50 to 500,000,000 as compared to around 600,000,000 in 2018. We are expecting some downward trend in some material costs including gas, even though the benefit of lower gas price will not be significant in the second half due to our hedging policy. We just have to keep in mind that we benefited from this hedging policy last year in 2018. As expected, the volumes were lower in Q2 due to the lower number of working days and the comparison basis impact. But overall, the volumes were positive at 1.2% over the first half.
The negative working day impact in the second quarter was around minus 1%. And if you see the number of days impact in the second half, we expect to If you look at operating income, you will see a very good like for like improvement with a 30 basis point improvement in the margin. Clearly because of positive price cost spread, positive impact of 35,000,000 of Transform and Grow. Pierre Andre said that we are ahead of our ahead of our program, in the execution. And we continue to work on our excellence program, which has given us 155,000,000 cost savings in the first half.
And we also had the better industrial performance as compared to the last year. If you see the business income, it's up by 5%. Non operating costs reduced from 1,000,000 to 1,000,000. If we exclude the positive one off impact of 1,000,000 related to CCAR, which we accounted last year in the first half, And the non operating costs this year includes 1,000,000 related to the transformation program in the first half and million accrual to the provisions of asbestos related litigation. Net gains and the losses on the disposals you have here is mainly linked to the divestments programs which we executed during the first half, in the PNG program.
Here, you will also notice that we are changing the definition of EBITDA, which we are under mentioned. I think one of the most important change we are making again, based on your feedback is we are not including the non operating cost in the EBITDA calculation. So the whole purpose is to equate this EBITDA to more resonate with the cash So, let's look at between the business income and the recurring net income. Regarding the financial results of 2018, we need to keep in mind that we had million out of 1,000,000 benefit from CCAR transaction and it was treated as a pure financial gain in the last year's first half results. And in 2019, it includes the dividend we received from CCAR 28,000,000 during the first half.
Otherwise, the rest of the financial costs are in line with last year. And the average cost of borrowing is coming down. The reduction in overall net income in 2019 is again due to the exceptional one off from the Sika transaction recorded in first half. However, the recurring net income, which is our real operational performance, increased by 16.7%. And similarly, the earning per share also went up even more.
The overall operating working capital increased slightly, but remains stable at comparable or exchange rate. You know, this is an operating working capital, is does not include the other working capital, you will see in the cash flow statement. And this is how we have been presenting throughout in the last few years. And this shows clearly that we have demonstrated the discipline in managing the operating working capital and that's something which will maintain that even in the second half. Coming to the cash flow based on your feedback, again, we have added this graph showing you all the details from EBITDA to free cash flow.
As you can see from the graph, we have not taken the impact of depreciation of the right of use because it's a pure accounting treatment. It's a non cash item. And it's coming out of this IFRS 16 change. And the financing costs, we have excluded Sika, benefit that is 28,000,000, which we received as a dividend because we believe it's not an operational, it's not the cash coming from operation. And the CapEx does not include the investment on the additional capacity as such because these investments are made based on our discretion for the future growth.
So you see the free cash flow is up by 40% and 30% conversion rate. And this is again, the new one which we have added because this is how you all talk about every time you look at the conversion rate, and this is 30% 33% is what is, for the 1st half. And I hope I hope this bridge helps you to bring more clarity on the cash generation of Saint Gobain. Finally, let us look at the debt equity ratio. You see the debt including this debt includes the IFRS 16 benefit, impact of, IFRS 16.
And this is, if you see the ratio, if if you see the ratio is slightly, better than the last year first half, but absolute debt has slightly gone up. It's mainly on account of the higher acquisitions we did in the second half of last year. Again, I would like to remind you that the debt equity ratio the way we have calculated here is by applying the new definition of EBITDA, which I explained to you earlier. Otherwise, our balance sheet remains strong and our credit rating remains stable and is actually in the upper range of the rating. Now, let us look at into details by segment.
Before presenting the results by the new reporting unit, let me explain it. We have now new 5 reporting units which are completely aligned to the new organization. As you are aware, the purpose of creating this new organization is to make our organization more customer centric, lean and agile. These five reporting units are high performance solutions, addressing the global industrial customers and we have 4 regions addressing the construction markets. Within high performance solutions, we are organized by market segments.
Mobility, which is the largest segment, providing solutions to auto, aerospace, and other transportation markets. And then you have the other industrial markets like life sciences, construction industry, general industry. In life science, we are providing solutions primarily to the health sector whereas construction industry is providing the textile and the reinforcement solutions to the large industrial customers in the construction market. And General Industry is basically providing various high performance solutions to industrial markets. And then our 4 regions are organized by country.
Through this country organization, we provide comprehensive solutions to the construction market adapted to the local needs of the customers. And it includes building glass, interior and exterior solutions, and distribution. I will now comment on results of each of our 5 new reporting segments. Starting with high performance solutions. We saw for like for like growth of 1% in H1 2019.
The volume is slightly negative mainly due to the sharp decline in automotive markets in China and Europe and then we have a lower volume in ceramics and we had an exceptional where we had an exceptional orders during the last year first half. Mobility market stabilized over the first half in a difficult automotive market, our depreciation strategy of moving towards high value added automotive glass solutions continues to pay off. Despite the ongoing contraction in Europe and China, our like for like sales in Automotive Glass remains slightly positive. As we continue to gain market share in electrical cars market, specifically in Americas. And our business in aerospace market is making a very good progress.
Industrial markets remain stable against a difficult comparison basis in ceramics in H1 2018. Activities serving the construction industry showed a strong growth. Notably benefiting from the good trends in thermal insulation solutions. And finally, the life sciences continue to show an excellent growth dynamic in the pharmaceutical and medical industries using plastics single use components. As expected, the first half operating margin is lower than last year due to the very high level of ceramics sales with a positive mix and also partly due to slowdown in automotive market.
However, if you look at this margin sequentially, there is an improvement of 60 basis points as compared to second half of twenty eighteen. So overall, high performance solutions has delivered solid results. Now let us look at Northern Europe. Northern Europe grew by 3.6% like for like in the first half. Distribution business in region in this region had a great first half.
And our industrial businesses in the construction market also progressed very well. In particular, gypsum and insulation. Nordic Countries started the year off with a very good sales trend in all main businesses In particular, the distribution business which benefited from the good dynamic in the renovation market. UK remains slightly positive in the first half, but actually declined in the second quarter due to the uncertain economic environment. Sales in Germany progressed.
And lastly, Eastern Europe continued to show good growth helped by easy comparison basis with 2 float repairs last year in Poland and Romania. Which had impacted our results of 2018 first half. So operating income grew significantly. Driven by good volume growth, a positive spread on raw materials and energy costs and with a good industrial performance. So once again, overall, Northern Europe region delivered strong results with a good improvement in the operating margin.
Now, Southern Europe region, which posted an organic growth of 4.3%. Even the growth was here led by distribution business and also the industrial businesses, specifically plus support, insulation and motors improved significantly in the first half. The pipe sales increased slightly along with our efforts to improve this competitiveness which we have been working for the last 2 years. France recorded a strong first half, driven by the construction market favorable in renovation Distribution reported a very good growth and insulation activities posted the double digit growth benefiting from again strong demand in energy efficiency related innovation work. Amongst all other countries in this region, Spain posted very strong growth.
Benelux And Italy Progress, Middle East and Africa were down in the first half, particularly in Turkey. It was quite difficult. Overall, overall, the southern region also delivered a very good results. Now, let's look at the Americas. Americas region grew by 2.6% on a like for like basis.
North America continued to benefit from a good pricing amid inflation of certain raw materials at the customer expense of volumes. And again, high comparison basis in the second quarter of last year. Exterior products stabilized on a like for like basis despite strong pricing effect. Insulation business is doing well. Prices are challenged in gypsum where we still have difficulty to pass on the inflation and The volumes also remained broadly hesitant.
Latin America enjoyed a continued growth momentum. In particular, in building glass and mortars businesses. Basil recorded a good growth over the first half benefiting from the new organization So operating profit overall remains stable. The Asia Pacific region increased by 6% organically. Supported in particular by building glass and plasterboard.
India benefited from additional sales from its new floor which is a 5th float line and the passcode continued its strong growth trajectory. Amongst our other countries in the region, China recorded a good first half marked by the launch of the new Plastics plant in China. Southeast Asia is facing a competitive environment, again, waving on our sales price. The overall, the operating margin increased from 9.3percentto9.5percent. Before I conclude, let me summarize the key points of our first half results.
Overall, a very good first half results, a good increase in margin, particularly in Europe with relatively a good industrial performance and good pricing level, not only offsetting the inflation, but giving us the positive spread and a very positive impact of the results of transformation program, which Benoit will update you. I give the floor to Ben Werner.
Thank you, Sheila. Good morning, everyone. So I give you an update on our Transform and Grow progress. My main message is clear. We are moving fast and we are ahead of our initial plan.
So we are very confident, but the benefits that Transform and Grow bring to Saint Gobain. I remind you that there are 2 pillars of Transform And Grow, a new organization, Agile, aligned to our customers and second, an active and value creating portfolio management. First, our organization brings already significant growth synergies. I'll give you a few examples, but there are many more organized by our CEOs, by countries, by markets, who have a direct and simple line of command on all the public lines within the perimeter that they manage. Few examples reorganizing our Salesforce, Multi Brand Salesforce by channel in Brazil on one side targeting distribution.
2nd, all the technical experts targeting prescription customers and 3rd, digital and marketplace. It did bring roughly 1.5% of additional growth in the first half. 2nd example, leverage 1 very strong product line to tool and accelerate the commercial development of another product line. We are strong, for instance, in glass in India and that did accelerate the development of our gypsum lines. 3rd example, to boost innovation when we gather all our teams, for instance, on the aerospace market within an integrated teams, we gain customer intimacy and we're able to better co develop innovation with our customers.
On top of those growth synergies, Transform and Go is also a cultural change in terms of agility on decisions. And also in terms of lean internal processes, we have reengineered and simplified a lot in order to free up time for our teams to spend more time with their customers on added value. We have also selected of them being native in the country in the perimeter that they manage. They are empowered on all their business lines with a very strong sense of ownership and also straightforward incentives to be more precise on that 100% of their incentives are now on the perimeter that they directly manage when it used to be roughly half in the former organization, the rest was linked to more solidarity items into the broader organization that were part of. So all our teams are on board.
We have made a survey end of March. 76% of them are convinced by the benefits of transform and go in terms of growth, additional growth and profit for Sangamo. So in terms of roll out, as I said, we have acted fast. All our teams have acted fast. Every country or market is contributing.
We moved from roughly 700 operational levers end of February when I presented that to you to more than 1000 by April, and we have been in the execution mode since then. So in terms of savings, we are ahead of our initial target instead of more than 1,000,000 in the P and L of 'nineteen. We have revised that up to deliver more than 1,000,000 in the full year of 'eighteen. We have already 1,000,000 of that in our first half P and L. For 2020, we have also revised up our target from 1000000 to more than 1,000,000 and will deliver the full 250 in the full year of 2021.
So frankly, I don't see risk of execution. I much more benefits than we initially anticipated. We have the right dynamic and the right execution levers everywhere. Now a few words on our digital transformation, which is a big and powerful opportunity for Saint Gobain, and we have made very significant progress. A few examples.
Our distribution business, for instance, is the largest user internally of our group data scientist. We have 80% of our French distribution customers using our digital tools. If I take SOLO plus, which is our job quotation, service for small customers, it's more than 100,000 used per year. We have also digitalized more than 80% of our building products information worldwide, which does reinforce our digital presence across all the construction value chain. Our e commerce distribution sales in France in the Nordics are up a strong double digit in the first half, for instance.
And also on the manufacturing side, industry 4.0, we keep increasing the number of robots in our plans and we use digital to enhance further our operational excellence. Our new organization helps to further accelerate on these digital transformation. By combining on one side, a dedicated central team of experts of IT platforms, gathering and sharing and leveraging all the best competencies. And on the other side, on the ground, a clear empowerment of our local CEOs country or markets to roll out fast their digital road map. A few words also on operational excellence, which as you know has been at the core of our daily focus on the ground for years.
We have developed over the years group excellence programs, whether on supply chain, marketing, manufacturing, But I would say that over the years, sometimes they became a bit heavy and sometimes not so well adapted to all the different local business situations that we have. So within our new organization and our central teams of experts on marketing or manufacturing, we have reshuffled those group excellence programs to make them agile and to make them well adapted to each local needs, for instance, differentiating between a small plans the mid sized or large plants on world class manufacturing. So the principle is to service and to help the success of our operations on the ground rather than the former top down approach. And this new bottom up approach makes the buying and the local ownership on execution much stronger. As Shida mentioned, we have already started to see some of those benefits in the first half results with good operational excellence savings.
Switching to capital allocation and the execution of our CapEx plan, we concentrate our CapEx on growth was 42% in the first half of 'nineteen in 2 promising technologies and in 2 fast growing countries. We have highlighted on this slide, a few examples, numerous projects everywhere that we have been active on in the first half of 'nineteen, whether in emerging markets, in fast growing areas like life science or also growing good insulation in France. In the first half, 55% of our total CapEx have been spent outside of Western Europe. And now the 2nd very important pillar of Transform And Grow, our active portfolio management. We are delivering fast on divestiture.
Divestitures representing over billion 1000000000 in sales have been closed or signed year to date. In H1 of 2019, disposal of silicon carbide, glass processing businesses in Sweden and Norway, signature of agreements to sell our distribution business in Germany, our generalist distribution business optimera in Denmark and our specialized civil engineering distribution business insurance. This comes on top of what had been done end of 2018 with the disposal of our pipe plant in Suzhou in China the EPS insulation from business in Germany and also the glazing min station business units in the UK. On the acquisition side, we made 10 acquisitions for 1,000,000 along the selective criteria that you know well technology like American sales, pretexts or also northern ceilings for specialty ceilings in North America, emerging markets like gypsum in Mexico or Argentina, and also 4 small acquisitions to strengthen our local leadership in distribution Europe. So all in all, I'm very confident about the depth of our transformation, organization and savings on one side, portfolio management on the upside, and what it will bring to our growth and profit profile, we have the right teams to succeed and to execute well.
I now hand over
Thank you, Benoit. Before I go to the outlook, let me let me say wrap up again that I'm very pleased with what has been done. I think the team of Saint Gobain has reacted extremely well to this program, and I want to congratulate all of them. We are on track to deliver a significant transformation in Saint Gobain. What is very good for me is that the growth which is the most important element of this plan is already happening where we thought initially that we would have to wait a little more and we were at the beginning more focused only on the realignment and the cost.
So, we are already seeing some benefits in terms of growth. Benoit gave you some examples. We are ahead in terms of our savings and reorganization is bearing fruit very quickly. So we expect from that a 60 basis point improvement in the operating margin when we have the full benefits of the plan and we are ahead of the as Benoit showed you on the target. We will deliver more than the 3,000,000,000 sales by the end of 20 and 15 and we have already if not in the P and L of 2019, but given what has been signed, we know that there will be the 40 are ready from what we have done, the 40 basis point improvement in the margin of Saint Gobain when on a full year basis when taking into account the the timing of these of the closings.
So, we are very confident on this program, both in terms of improving the growth profile of Saint Gobain and improving the operating margin by 100 basis points by 2021. When I look at the portfolio evolution, I want also to stress when I say that we will do more than the 3,000,000,000 for 2019. We have done 2,800,000,000, but we have a number of projects which are ongoing and we continue as I told you in February is review of our portfolio in the framework of the new organization, which is giving a new angle to our businesses, when we talk about the local businesses, it is within the countries that we appreciate our footprint and we can see what are the pluses and minuses and the evolution. Same thing for the markets within high performance solution. I expect from this review further acquisitions and further disposals.
So, we have a number of projects in the way we are also studying for some of our businesses like in pipe, as you know, partnerships to strengthen the position that we have, by the way, we have had a very a good improvement as Benoit said in our pie business. So the this plan is an ongoing plan. I don't intend to give an additional target in terms of sale. We first will complete that, but I want to tell you that we are continuing on this pass both in the acquisition and in divestment. Now, if I come to the outlook, I think the I am confident about the outlook for 2019.
A high performance solution, we should have satisfactory industrial markets. We see some slowdown here and there, but globally, we have also some very good markets So globally, satisfactory, in particular in the US, we have ad, and that's, I think that, in automotive, the drop of the automotive market has been higher than what people expected and that's why I expected for the first half 7% that you have seen that in this environment, our sales in the in the automotive market have been slightly positive and even in volumes slightly positive. So I think that we over perform clearly. In Northern Europe, we should have further progress after a very good, first half. We see good trends.
I remind you that in the Nordics, we have had very good with very good sales where like last year and contradiction with what some macro analysts are saying and I think it's we are going to continue to perform. We say that So, the rate of growth of this year will be a bit lower than last year. We had, but we still have good growth in the Nordics. So, innovation market is picking up strengths. The only country where we have more uncertain and I flagged the uncertainty, but what's happening in the UK from a political standpoint is having an impact clearly and I think the environment is clearly uncertain.
We had probably a little bit better first quarter than expected and a little less good second quarter, which was due to some to some stocking impact before 31st March. But we have, so we have the rest of Northern Europe is Southern Europe, clearly, that's, my outlook for the year is better than what I said at beginning of the year and it was probably already more optimistic than most. We are seeing and this is a very good news of this first half is the French market and the French market for two reasons. First, we don't see yet a drop in a new construction we know that the statistics are not good, but I think the maybe the activity is going to go less down on the statistics we have seen, and it's and it's taking more time. And at the same time, we are seeing a pickup in renovation, a quarter to quarter And in fact, you should deduct the number of days.
The 2nd quarter in renovation was good and this is driven by energy renovation. That makes me optimistic because I think there is a lot coming on. For instance, our sales in the first half in France were up double digit in insulation. And we think that given, you know, I don't need to stress the climate in yesterday in France, I think the emphasis of most government on this topic is going to grow, which makes me strategically not only for the second half of this year, optimistic that we are going to have a good outcome. So, France is better than what I thought, which was better than what people thought at the beginning of the year and I am still quite confident on France.
Americans, we have seen a kind, we expect a kind of stabilization. We have a good pricing, but the volumes are a bit more difficult in the first half, partly because we have privileged volume, price to volume. And we have some uncertainties in Latin America even though we have that's where we have seen the first benefits in terms of additional growth from our Transform and Grow program. And Asia, we should see further growth. So globally, I would say, markets which are globally a little less supportive, but for Saint Gobain given also the importance of France, I would say that my outlook, is, is, very, is is positive for the second half.
In this framework, our priorities is still to grow our sales price is, you know, it has been a strong priority for Saint Gobain. We continue to be focused on that. We are going to continue the implementation and Benoit shows our confidence that we will deliver more than what we had in mind for this year in terms of the TNG savings in addition to our industrial manufacturing improvements and the impact of digital transformation which is very positive. For instance, in France, we have also, you know, in distribution, we have, we have still seeing an increase in the cost of digitization, but we have had more a bit more quickly than what we thought also. We have had a productivity again impact which is clearly helping.
On R and D, we will continue to invest. This is key for us in the future to increase the part of the differentiated products of Saint Gobain and we are focusing on the high level of free cash flow with this I think that Shreedhar is on top of that as illustrated is in presentation. So, globally, I confirmed the full year objective of Saint Gobain in terms of operating income, but I would say after 8% for the first half, this doesn't sound extremely challenging. So, I am also able to tell you that we are targeting an increase of the operating income in the second half where it's clear that, remember that last year, our performance in the first half was hampered by some operational difficulties, the comparison basis of the second half is a little bit higher, but we are confident we will continue to progress. So I'm very, I'm very confident.
I am pleased with the results achieved as a team and I think we are going to continue to overperform our markets like we have done in HD ES in a number of areas. It's clear that we have we are over performing our markets at the moment and I think that the new dynamics of Saint Gobain is going to continue to help us to to overperform in global markets which are I would say globally a little bit slowing, but not especially for Saint Gobain. Thank you. And I think we are now we are Benoit, Shreedhar and I, we are at your disposal to any questions, you may have. We start from question from the room and then the internet and then the no, then the phone and then the internet.
So in the room, yes.
Thank you. Joseph Pujal from Kepler Cheuvreux. I had three questions. The first one on these difficulties that impacted you last year in H1. Could you be a little bit more specific about how much did they help you in this H1 this year as a comparison.
The second question is on the pricing in Southeast Asia. You have said that it was a little bit weak some cases of a tough competitive environment. Could you be a little bit more specific, which products, which countries? And my third question is more at curiosity, but, you have gone from 700 levers identified in February to 1000 now, and the target remains 1,000,000 So, could you explain a little bit?
So, I think the second question in Southeast Asia and we have had in some some businesses, some competitive tensions in the plasterboard in the first half. It was, I would say, Thailand was probably in Indonesia where a bit difficult. I think that it is improving at the moment. So I am confident we are going to do a bit better. On the comparison with maybe Shreedhar and Benoit will talk about the 3rd question.
Yes. So, you know, comparison with last year, as we said in the past, that it's not that straight forward to calculate exactly the precise numbers. If you know that last year, we had various reasons for which the results got impacted. 1 was because of the weather conditions. Which was certainly harsh winter impacted our sales.
And that's something which is very difficult to quantify because you know that in many of the countries, we do have this shortage of labor, especially in the developed countries. You don't know how much we recover in the Q2. So that's one element which is still not easy to quantify, but otherwise in terms of industrial performance, I think the best way to look at is to compare the performance we had in glass in the second half of the last year. I think that difference should help you to understand the impact of the industrial performance. Only thing we want to confirm is that the industrial performance is certainly better, better than what we had last year.
We are making progress And last year was certainly an exceptionally difficult year for us in terms of industrial
performance.
And on your question regarding the levers, so first, it's not proportional in terms of savings. And second, we had a lot of cost savings initially. So, most of the short term actions were on cost. And after that, we have developed more growth actions. If I take friends from large country, France.
We have launched a new organization in France in endofMay early June, which is more driven by growth the cost actions were taken initially at the beginning of the year. So we moved from mostly cost actions at the beginning to much more growth levers in the into the full year. And after that, we don't intend to go to 1000 or 500 or 2000. We have a lot of actions. They are good And as I said, we have entered since the beginning of the year into the execution, making sure that we deliver the full potential of all those actions.
Laurent, it's an asset management. I'd like to understand on the I welcome your increase the target in terms of savings, but I'd like to understand what is your ambition in terms of what is retained operating profit you will get from this additional savings?
I know this is this question comes because we have an operational savings which we run the operational excellence program. And we have always said in the past that this operational excellence program helps us to offset the other cost increases we have. So coming to the TNG savings, we said that it will straight away. It should reflect in the operating profit because what we are trying to do in the TNG program is trying to adjust our structure. So I don't expect this T and D savings to get anywhere disappear.
So it should be there in the period of operating profit.
That's why we said we have in mind to increase our margin at the end and we're starting to see that.
And we are certified in the 1st half the P and L, directly in the P and L.
Yes. Good morning. It's Daniel Delfeld ODDO. 3, a very quick one. First one, there has been a meeting yesterday at Dursi, with Porta Munson Union.
I just would like to know whether you had any insight on this one before the press take care of it. 2nd one on Leroy Merlin. Laura Bernard, they have recently launched an offer, for a kitchen. So do you believe this is a game changer for Lapeyre? And could it means that you would be selling Lapeyre to L'Oreal And the last one is on the Pointerpre infrastructure.
I just would like to know whether the trends include the 2,000,000 cubic meters of ready mix concrete you have. And if not, does that mean is, this activity really makes concrete is a core business for you?
I will answer the than the second one and Benoit will answer on Pam. No, so the concrete, on concrete, in fact, you know, there is we have had this question asking ourselves this question for a long time. I think that what we do is really things which are linked with our merchanting activity. So, for small type of job not at all the infrastructure type of pickle cream but it's clearly a very useful to be able to offer that to our customers. So, this is not part of the sales and this is when it is very linked with diffuse market I think it's like a number of competitors of Pompey have the same strategy.
I think for the issues market, we are keeping activities there. In fact, we have been depending on the region and so on the way craftsman work in different regions. We are more present in the in the western part France and in other parts of France. So it's really linked with the actual demand from our customers off my page. It's not an activity in itself.
It's at the service of the rest of my page. Concerning kitchen, no, Lauren has done kitchens for a long time. And so it's the peak, the game is not changing. I think it's part of the competition and I don't see any change for La Bear where we are focusing on our on the improvement of our performance and we are, we are, we expect to see an improvement in the on Dursi, Benoit, you were not there. And the
new rollout of the new kitchen offer of that, which is very good. So I invite you to go and see our new first of kitchen.
Yeah, we have also dual range, which
is very nice. On the on the pipe situation, as you know, we informed the unions mid February, but the fact that we were thinking about partnerships for pipe to strengthen commercially, industrially, our pipe division long term it became public. So, we had of course some discussions with local politicians, national politicians, Bercy got involved because it was quite reasonable to have also a third party administration view on that. So, we had a good discussion with all relevant stakeholders. And recently, some of the local politicians wanted to have an update before the summer, which they had yesterday, so I can see that you read less TRIP EBITDA.
It's not set in the national press. It was a regular update on what's going on in terms of various discussions on those partnerships and different options. So nothing new and on our side. Locally or in Paris. We have also regular discussions with all stakeholders to make sure that everyone is in the loop so that everyone can support the partnership.
We did exactly the same when we launched the project Avenue, so the restructuring plan of a bit more than 2 years ago, which is doing very well ahead of plan. So, profitability of point and distribution has improved a lot over the last years.
Okay. Wait. So can you hear me?
Yes. I have two questions. First one, regarding the difficult subject of Porte Mouson and also Lapeyre. Porte Mouson, you mentioned an improvement in results. Do you mean you are now in positive numbers.
1st use of minus 1,000,000 last year. Lapeyre, are we now in positive numbers? And the question regarding the situation in the exterior products in U. S. And insulation and plaster board in Europe and in U.
S, where do we stand with price and volume? I'll take
the question first one and Benoit, you'll answer the second one. No, so you have seen a very significant improvement of the profitability of Southern Europe in the first half. And clearly, France is around 75% of Southern Europe, So we have a very significant improvement of profitability in France from most of our businesses. So yes, is in the black. And in terms of, La Per, La Per, we are still a negative profit in a negative, I mean, loss negative results in Lapeyre.
But clearly, as Benoit said, in Pike, we seen a significant improvement of the projects that was last 2 years ago. And it's a little bit ahead of schedule on that one. On the on the second question,
So it's an installation in Egypt but a bit all over the world. It was
No, but I, yeah, it's different in Europe and in US. Yeah.
So on in the U. S, we had a good first half in insulation, partly on the pricing side, volumes were a bit softer, but a good evolution on the on the results. So a significant improvement over the last 2 years Gibson has been a bit tougher on volumes and pricing, which is different from the exterior products. The roofing has been a bit more significant in volumes over the recent weeks and so the price increase that we have put out should stick. So, roofing and siding have been more positive, partly on pricing and a bit of fragmented storm activities in the recent weeks, which help roofing Gipson has been a bit more difficult in the US on pricing recently.
And don't forget that in North America, we are quite significant in Canada for Gipson. And Canada, as you may know, but the construction market in Canada in big cities is quite down this year. So, we are a bit more impacted by Canada than the US situation. In Europe, overall, it's a good momentum on installation and gypsum in most countries, both on volume and price.
I mentioned specifically insulation. I think that the insulation is going to uh-uh we have seen very good growth in in France And I am I think that the forecast for us for this business in the various countries in Europe is very positive.
Yes. Yes, Jean Rubenetel from Umfield Research. I would have three questions, if I may. The first one is about your transforming growth program. Just wanted to understand what's the 24% of your managers who are not convinced by the program are flagging and what are you going to do with them?
Because I suspect that you won't have 100% addition to be successful. 2nd one would be on the development. You said you have no taboos in term of disposals. You have no taboos in term of disposals. Could you consider in the coming years to exit fully distribution?
And regarding acquisitions, we can see that you have spend a lot on bolt ons on the HPS, will you continue to have what I will call a niche market approach on the HPS side or do you need more critical size over time in this division? My last question, sorry, is on price and cost spread in H2. You mentioned that because of your hedging, you will not fully capture the benefit of the decline of the gas price. We can see on the pricing side that the base of comparison are a little bit more challenging in H2 So, can we expect a new round of price increase in the second half or do you see you know, spread, varieting in H2. Thank you.
The first one. I'll take the second one and see the other one.
On the first one, well, first, we are transparent with you. So, and second, you take the glass 1 quarter empty. I take it 3 quarter full and 3rd it's a survey that we did end of March amongst 3000 managers because we wanted to have the baseline just 3 months into the program And I consider that has a very good positive feedback that 76% even though not 3000 managers had seen all the details and all the communication and all the action plans for the coming 2 years on TransFormango after only 3 months. They were convinced and embarked on the power of TransAlango. So I'm extremely happy with the 76% and of course, the goal is to embark 98 or 100 percent of them, but you know, in those large deep cultural changes, we have to embark a lot and so it's not a dictatorship.
It's trust and empowerment and we cascade. We communicate a lot internally on all these because what gets shared, it gets done. So, it's more bottom up approach than top down. Let's do this. Let's do that.
And frankly, 76 is, I think, a huge, good starting point and of course, we'll continue to revisit that, going forward, but I consider that as very good
and you know at the end of that, prefer managers who are a bit some people but deliver the managers who are very saying, oh, it's great, it's great and don't deliver.
I'm sure I'm sure you will redo a survey and we will see the 100% that's the goal.
On strategy, I think I already answered questions. So, I'm going to continue to give you the answer. No, I don't, we don't have in mind, to sell our distribution business as a whole. We are looking at it in the framework of our new organization. And as I said, given the strengths we have in the different countries, and so there are some countries where we have increased that what presents in distribution recently and last year in Norway.
And if we have opportunities to increase our presence in France to do further consolidation, we will do that So, it's really a country by country approach given the footprint we have in these countries and what it gives our program. As I told you already, I think that there is a with a digital revolution in our sector the cars are moving and when you are when you are very strong in distribution, it's a big a plus in the future in my view for the overall footprint in when we are in that situation in Saint Gobain. So, I think it's a country approach. In HPS, you know, we have always been, having niches. We have always had a rule which is in all these niches is, you know, it was 15 years ago.
We call it gold silver, browser out, which means that we want to be one of the main leaders in each niche and that exact level that we need to appreciate. So we have been exiting some businesses. We have been adding some more because the markets are changing. We are going to continue to do that. We don't have an issue of a critical mass, but there are some adjacencies, some which are small, some which could be bigger that we may consider in the future in that business where clearly in terms of innovation R and D capabilities that there is a critical mass impact but I think this is very important for the rest of the group this critical mass of R and D.
I think we have it. We could expand but I don't think we are subcritical today in HPS.
Yeah. So, summing to your question, whether we are going to have in the second half positive spread, you know, as an organization, we are extremely focused on cost price and this is something which we have consistently done, leaving few very few exceptions. In the first half, we did have a lot of inflation, quite a quite a lot inflation. But looking at what I see the trend, current trend, I we hope that we are expecting that the inflation will be lower in the second half. In any case, we would remain focused on price.
We'll make sure that our objective at least is to make sure that we pass on all the inflation.
And sorry, just to be to understand clearly, your price pricing effect was plus 2.5% if I remember when in Q1, press 2 in Q2. The base of comparison in H2 is more challenging. So, we should see a facial erosion sequential stability for H2 or can you push prices in certain activity to get more benefit
Yeah. So we are pushing prices. It's not that we are going to stop pushing prices. I mean clearly roofing is one example. We want to go and push for price as far as something which went up and there are a lot of signals that it may come down.
I have, you know, we need to be cautious. So in all our businesses, we constantly look for opportunities to push prices. Sequentially, I expect based on what I see as of now, and it's always difficult to predict. Because it's pretty volatile market. So, sequentially, the inflation is coming down.
We hope it will come down and the spread is what is important for us and we would remain focused on making sure that the spread is positive.
Good morning, Nabil Ahmed, Barclays. I actually got 3 questions, if I may. One on the outlook, one on the margin and when on transforming grew. First of all, on outlook, you seem to be a bit more cautious on the Americas. And if I understand correctly on both North And South America.
Could you be a little bit more specific on what has deteriorated here? In North America, is it the comment you made on gypsum, which is facing more, more difficult environment for both volume and pricing or is there anything else change on the way you see the outlook in insulation and roofing. And on LatAm, Funch were quite optimistic on Brazil. So, has that changed or are there other specific countries where you see trends that are weakening? My second question is on the margins.
Do you see the HPS margin in the H1, which were very strong? So congratulations for that. Sustainable into H2, Or are you still guiding towards something that would be closer to H2 2018 margins? And lastly on transforming GROW, Sorry if I misunderstood, but I'm not completely clear why you are increasing your savings target for this year. Is it like the removal of the management layers?
People are leaving earlier Saint Gobain and therefore you got more savings in 2019? Or is it that you are moving faster with the share services usage and therefore getting more savings on that?
Well, on the savings, it's mostly that we move faster. So when we initially put out the 1,000,000's target, it was end of November, Frankly, it was a bit more of a desktop analysis than the bottom up analysis from all the operational levers. So we have a firmed up, and the teams have executed extremely fast. So it's acceleration of the actions rather than changing the full scope by 2021. So it's mostly a timing issue and a lot of cost actions done very early in the year.
But in practical terms that means headcounts decreasing earlier than expected?
All those actions, it's not only headcount, but all those actions going faster than initially anticipated end of November when we announced Transform and Grow end of November of 2018. On the outlook in Americas, I think we answered already, which is yes, a bit more challenging in gypsum, partly on pricing, a bit better in exterior products, partially roofing over the last weeks and we are confident and very active on the pricing that we have set out for roofing. So it's pluses and minuses. Good of all in insulation and ceilings, but so the pluses are more on the exterior products and a bit negative on pricing in gypsum, but overall a good stabilization of North America. And in LatAm?
In LatAm, you know, what when I say clearly the macro environment in LatAm is less good than it was we anticipated at the beginning of the year clearly, you know, there some forecast revision in Brazil. So, we are optimistic to over perform the market, which we have seen in the first in the first half, but clearly the market in Brazil at the moment, it's a bit more difficult than what we are at the beginning of the year. That being said, Brazil, we know that it changes very fast. So,
sorry, Mexico is a little.
And Mexico is a little also the, the economy in Mexico is a little bit, less strong that we had anticipated for the domestic market. So, that's why we are a bit more cautious on South America. Concerning HPS, you know, we flagged many times that the second quarter, especially sales and profit and because of that, the first half profitability of 2018 was a very high level. We had some exceptional orders in ceramics with a very good mix. So that's that we didn't have in the second half of twenty eighteen.
We didn't have in the first half of 'nineteen, we don't expect to have that in the second half of 'nineteen. That being said, I think that the kind of level of margins we have in the first half looks to us sustainable. So now there is no more question. I go to the, to the course. So, I think it's, Will Jones.
We have a first question from Wilf Gents from Redburn.
3, if I could, please. The first was just around, exploring the group's volume performance. If we look at the first half, pre today's effect, I think it was around 2% growth and it was about 0.5 percent positive in Q2. Just when we think about that, I guess, the run rate that you would carry forward and think about for the second half, should we think about more of the H1 overall or more around the Q2 in terms of that difference for like for like volume growth going forward? Second one was just maybe in construction glass in Europe.
Could you give us a bit of an industrial update on and I think we need to be aware of it at all around capacity or competitive behavior? Is anything changing on the supply side, I suppose, in glass? And then the last one was more of a technical one, but when we look at Americas in your format. I think you did a 9% margin in the first half last year, a 13% margin in the second half. Is there any reason why margin is so much higher in the second and the first under that new format.
And I guess do you think you can match the 13 again as we look to the second half of 'nineteen?
So I'll take the I'll take the first 2 and good morning. So on volumes, globally, I think that the for me, the run rate is more the average between Q1 and Q2. So, it's the 1st half. Clearly in Q2, we are the 1st negative impact of the working days and we will have on the run a positive one in the Q3. We have had, as I said, in HPS, a very difficult comparison I remind you that last year, if I am correct, HPS was up 10% in the Q2.
So that's the basis for the for the rest of the year is more the average of 2018 and in HPS, we add last year already a drop in some markets in the second half. So, the comparison basis becomes clearly much easier. That's why for instance, if you take if you say what the automotive makers are saying, they are if I try to summarize what they say they are slightly negative to flat for the second half versus minus 7 in the first half because also the comparison basis is better. So, that's so HPS, I think we'll have an easier base than the Q2. Clearly, we'll have also an easier base in the US in versus Q2 where we had also last year a very strong increase.
You know, it's linked with the stocking destocking our distributors in roofing. So, I think that and we add also in Q2 you would have noticed that the Northern Europe Q2 was better. No, sorry, it was less good than the Europe and Q2 in Southern Europe, I think that it's always difficult to predict and Benoit already talked about that. No, Shreedhar talked about that, that the weather impact, we have clearly had last year a very good second quarter, especially May June in some countries in Northern Europe in particular the Nordics. So, the comparison basis of Q2, we catch up, we caught up last year a little bit of the bad weather of the 1st few months in May June.
In France, we didn't have this impact last year. I think we didn't caught up. So that's why we have a little better. So that means that the open basis is also saw a little bit uh-uh was a little more difficult in Q2 last year this year versus last year than Q1. So If I summarize all that, it means that I think that there is no real downtrend globally in the Q2 volume versus Q1 as a run rate.
So that's more the that's what we are seeing some in terms of construction glass the situation, we were, you know, we are, we didn't have enough capacity and that was a conscious decision that I spoke about many times in the past in the last 2 years. So, we were buying glass for our needs. The drop in the automotive market is having an impact. So, at the moment, we are, we are, I would say more balance and there are some some capacities which are going to come on stream in the next 18 months, but there are also some repairs. So, I think that the capacity balance at the moment is relatively on par at the moment.
So, but we don't expect, but I said that already for 2, 3 years, we don't expect significant increase in the price of Flat Glass. We are working on our mix and we are continuing to improve our mix. The 3rd question that's available.
Well, it's 2 margin last year in North America was partially high thanks to a very strong pricing environment and a positive spread versus raw materials in energy. So, we expect that second half to be a bit challenging for this year. So, we are not going to repeat the XM level of margin, even though we are very focused on price as you have heard already, partially on roofing,
And in Americas, there is also generally the 2nd half is better. Those are the first half, yes.
Thank you. Next question comes from Arnaud Lehmann from Bank of America.
Thank you very much. Good morning, gentlemen. I have three questions, if I may. Firstly, thank you to Sreedhar for slide 12 on free cash flow. That's very helpful.
You give a bit of granularity on CapEx in particular. And I think in the first half, we had about twothree on maintenance and 1 sort of on expansion. Can you confirm that is the right level for the full year and going forward about 2 sub maintenance, 1 sub expansion. And also if I just look at the maintenance, that means around if we analyze about 1,000,000,000 per annum, 70 5, 80 percent of depreciation, is that the right order of magnitude? That's my first question.
My second question is on your, on the share count. It's, you're right, it's actually down compared to June last year, but it's a little bit up compared to December 2018. So would you expect your share count to actually decline on a year on year basis at the end of the year? Are you going to continue to do some share buybacks? And lastly, could you give us an update on your CO2 position, we're getting close to the phase 4 of the European emission trading scheme.
Do you have excess quotas from the preview phases? And do you see a risk of being shot to you too, in the next 2 to 3 years?
Okay. Shreedhar on the first 2, and I will answer this third one.
Okay. So, it's true that we have given the split and this is something which we'll continue to give in the coming days. Now your question is, is this ratio is going to remain? It's very difficult to answer because it depends on the projects and the time of the execution of these projects. So, I don't want to put a ratio to it I can only say that the overall CapEx, the investment which we said both tangible and intangible, it's a plant and machinery and intangible assets, we will stick to what we will, our target is to remain at the level of last year.
So, that's one thing. Coming to your other question on depreciation, you know, it's very difficult to calculate the depreciation. It doesn't it depends on the assets which we have which we are investing on then the year of depreciation is not the same. So, it can vary from asset to asset. So, again, that's not a question which be able to answer you with a very, very precise number.
Other question on the share number of shares actually in the number of shares has come down by 600 1000 shares. Last year, by endoflastyear, it was 544, and now it's 543.4. There is a small reduction.
Maybe just to add on what Shila said on CapEx, it was exactly 42% growth in the first half. And as you said, it varies based on the timing of those products. So if we take the last 5 years, you know, the twothree, sixtyforty that you mentioned is correct.
On CO2, we don't have issues on CO2, in our businesses. We don't think that there will be an impact in the next before 27, 28. So, we don't have issues with CO2. And I remind you that Global is a very significant provider of solutions in terms of CO2. So, So we are, we are reducing our own footprint.
I gave a target to reduce by 25% and we are on track. We are, we publish that every year. We have had a significant improvement last year. So we are on track to reach this target. And the second point is that each time, you know, we emit 1 ton of CO2 out of the products which when they are in all during their lifetime as they save around 90 tons of this CO2.
So Saint Gobain is a very significant part of the solution to the CO2 reduction in the planet. So, I think on this front, not only I'm not worried about the cost impact, but I think that we are a very important green stock if I am and I am very strongly supporting the involvement of finance in this climate change program. I believe that the investment community is together with the young generation, the 2 forces which are going to make it happen despite some developments. So clearly, I urge the finance community to be active in this in this climate change program, which we badly need. For our future.
Next question comes from Manjes Briel from Societe Generale. Sir, please go ahead.
So yes, good morning. So I have two questions. The first is on your net debt guidance for the year. I mean, So in the first half, obviously net debt excluding the IFRS lease accounting actually have increased because of huge working capital investment, but this is normal. I mean, every year you have this increase.
But just trying to understand, you have done some divestment maybe signed it, but not got the money. So how much you expect from those divestment? And what should be the net debt at end of the year with the working capital that will happen in the second half. So should we expect with this disposal and the working capital reversal in the second half, the net debt to be lower than the last year, pre IFRS, this is my first question. And the second one is basically there is a lot of moving parts, I mean, the base effect in the second half of the operating profit and this cost spread, price cost spread and things like that.
But just wanted to have a word like, okay, in terms of EBIT margins, I mean, do you expect in the second half to be, I mean, improving versus last year. Okay.
I know Manish has this difficult question. I don't think any of us can make a guess out of it. How much would be the exact precise number of debt at the end of the year? Because it depends on various factors. How much acquisition we'll make.
Acquisition again depends on how much we are able to make it happen because it depends on price. Depends on various criteria. Divestment again, it has got, we have, clearly, we have worked on this. We have a lot of projects identified on divestments. Again, we don't know exactly what time we would make it happen.
So, there are lots of ifs and buts and all this. So, only I can say is that the debt is if you see the ratio as compared to the last year, there is a slight improvement again, we have a lot of awareness that the debt is something which we are as an organization, we are looking it much more deeper. So, So, so I can only say that we are going to remain disciplined. We are going to work on it at the end of the day. The rating, what you have is quite solid and we were earlier thinking that with the EFS 16 is the rating would big difference.
Actually the agencies, they take into account their own estimates and we now see with the real numbers, actually we are in a likely above range of this rating. So, we are quite well positioned as far as the rating is concerned.
Concerning the EBIT margin, as I am not quantifying the increase in operating profit like for like for the second half, I'm not going to to quantify the increase of margin, but we expect an additional increase in the margin versus the second half of twenty eighteen. Next question?
So maybe just a follow-up. I mean, on the net debt, I mean, so let's assume, I mean, you don't do any more divestment. I mean, but what you have signed, you get the money and maybe you don't do any more acquisition you have the scope impact, I mean, because if you are assuming these things, then what will happen to the net debt with how things are moving, what we have seen in the first half?
We don't make those assumptions. Because we don't know. Okay. Next question?
Yes, next question comes from Ed Roman from Exane BNP Paribas. So please go ahead.
Already been a long call. And the first one is on the consideration of the divestments. You mentioned that you've already achieved about 2,800,000,000 signed or executed, are you also running at around 90 percent of the 1,000,000,000 target in terms of value consideration? And following up on this question, given that you are running ahead of expectations, how should we think about margin expansion versus your initial targets of 40 bps impact from divestments and 60 bps from cost savings. My second question is on capital allocation.
Could you give us more transparency on how you will use the proceeds of these disposals? Could the group get below the 530,000,000 medium term share count objective And what options do you have in terms of shareholder returns? And thirdly, we have recently seen some of your U. S. Competitors launching strategic reviews including in the plasterboard industry, given your flexible, balance sheet, could you look at consolidating this industry and rationalizing capacity to increase prices and margins?
Okay. So coming on cash, you just have keep in mind, this objective was set during the Investors Day in 2017. So if you just take into account all the divestments we did from that point of from that point. We are close to 60% of what we said. If you end of June, And if you also take into account which is not at close, the largest divestment which we are doing is the German business distribution business and we also recently announced the divestment of DPM, DMPDMT And this, all this should help us to come closer to 90% of our target as of now.
So I take the 3 others. So on cash allocation, I think that the, graph that Shreedhar gave on the cash we generate, then there is second part, which is allocation, and I always, answer the same way. There are 4 use of this, cash and I think that the new presentation helped to understand the way we do it. There is 1st gross CapEx. There is a dividend And I think then there is acquisitions minus divestments or divestments minus acquisition, but I'm not sorry, the divestment will come may come as cash.
So anyway, acquisition and the first one is a share buyback and I am always looking at these with the first one and the second one being prioritized over the third one and the first one. And between, so first, our gross CapEx and our dividend, following our guidelines, And then for the for the 2 others, depending on the we are more opportunistic and that's what we have been doing and we'll continue to do that between between share buybacks and M and A. In terms of the margin increase linked with the Transform and Grow program. I think I answered during my presentation. We have we have at the moment, we are not changing our targets of 100 basis points on the bottom line and quite happy when we have delivered that.
In terms of, consolidation opportunities. We are regularly looking at what's going on in all our markets. We are, as I said, we have we have been focusing more on small, medium sized acquisitions, but we are also and we have the power in terms of balance sheet to do a bit bigger ones. We are looking at and there are a number of opportunities which have a reason. You mentioned this one.
There have been others. We are very disciplined on price. That means that there are some significant opportunities where which we have declined and but we are studying in view of the synergies we can get, the price we can pay whether it makes sense, being very strict on our capital discipline as we have been there. So, that's something we we are, it's part of the things we are looking at.
Next question comes from Eric Henry from Bryan Garnier.
Good morning. Thanks for taking my question. It's regarding France. How do you explain you don't feel the slowdown in the new housing in France. Is it because you are more late cycle in your view or maybe there is some geographical issues or maybe you are now much more exposed to renovations than few years ago or maybe statistics are not maybe representative of the real market trends?
What's your point of view on that?
My point of view is, the most important thing is that seeing some statistics that are seeing in terms of professional association are not don't correspond to the reality. Think that when we have a growth of 4% in France and I see that the renovation market would be flat, it cannot be, I know we are good, we are are gaining market share, but you know, most of the other merchants are also customers of our activities and our industrial activities are running. I talked about insulation even at higher space. So, I think globally is a construction market in France and I think our distribution activities is a good proxy. We are doing well.
I think we are over performing as I said, but I think the market is good in France also and I think the statistics that you may look at, don't represent what's going on. I think I've already said that in the past and I continue to say that and our figures show it.
Do you think it is right for the new housing as well?
I already answered that. Yes. No, sorry. What I are you asking, it's a bit different. I don't I don't what I said on new housing is that we you know there is a there has been and we have seen in the past a delayed in housing permits, housing starts, and the activity.
I don't say the statistics which are official statistics and housing permits and housing starts are wrong. That I am not saying that. What I'm saying is that they don't translate into activity for the time being and I think that so the delay is longer and they may not completely transfer it to into into activity. That's what I said. But no, no, the statistics on housing starts, I am not saying they are wrong.
So behind the statistics, we are over performing. We measure it. We gain 20,000 small customers in our digital business, which is over the market. So it's also our domestic market.
We haven't any question
So we go to the, internet. Oh, no. First question, from, Robert Gardiner, maybe, Shreedhar, you answer?
Yes. So the question is, what is the price and volume effect for Q2 by division? So Yeah, sure. It's there, but I can, I can repeat it's for the Q2, it's specifically for Q2? So the HPS was 1.5%.
The volume was -1.9%. Northern Europe was priced 1.5%. The volume was minus 1.4%. Southern Europe was 2.1%. Volume was 1.6%.
America was 4.2%. Volume was minus 3.4%. Asia was minus 0.5% volume 3.9%.
The next questions is so far. Can you summarize, is it to be received of the 2.8 says, and if it's in fact, I think you you already answered that question on the proceeds. Is your comment on the more challenging H2 that's Gregor Kudlitsch from UBS your comment on a more challenging H2 implying both lower organic sales and operating income growth versus H1 'nineteen. I think I answered on our organic sales growth. I don't, to say that the running rate of the first half and not this 2nd quarter doesn't seem a bad number in terms of operating income growth versus H1 uh-uh the margin I think I answered, you'll be slightly higher in terms of the absolute number.
Yes, H2 is is generally stronger than H1 and also it will be the case this year. As in terms of number of days, which it will be, this will be, they will have more days in the second half on the other hand, compared to last year, the second half of last year was much better than the first half of last year. Question from Elodial, JPMorgan. You had a good performance on working capital. How do you see the evolution in the second half?
Do you expect further improvement in H2? I think
I'm happy that she's recognizing it. So good. We will continue to remain disciplined. We will remain disciplined. We will make sure that we keep this under control.
And that's not something which we have done it historically.
Another question from Elodial from, in the Americas volume, we are down in H1 and your comments are more cautious than before. Can you provide more color and do you see further share on margin H2, not in margin H2 last year was 13.3. That's just 19. I think good one, you already answered that question. Yeah.
And it's purely the mix of a bit better in exterior, a bit not difficulty in Italy.
Previous guidance for restructuring cost was 1,000,000 in 2019. Do you expect this to change given you are accelerating the savings plan?
At this point of time, we want to keep that number as it is. We are not changing that number for 2019.
What was the contribution on ForEx in EBIT and H1? And can you clarify if your definition of light for like growth in its total income includes or excludes this ForEx impact. No, in like for like, there is no ForEx impact, you know, but there was, I think, there was some impact last year, which was not for X, but which were on on not on not completely parameters, some, Argentina and the consolidation of Venezuela. Yeah.
Yeah.
Can we get price versus volume by division? I think you just answered that question. And while we know you have disposed of businesses we said about 2.8, what is the APPRO mix profit figure? And how should we think about it in terms of timing and impact on scope effects in Q3 and then into year 2020. I answered in terms of 2020 in terms of Q3 and Q4, it depends on the timing of the of the closing of the of these deals and sometimes, you know, they are regulatory approval and we don't control completely the the exact timing of in France, sometimes some social regulations.
So that's a question we had. And I think that with that, that concludes our meeting. Thank you and good holidays for those who are taking holidays in August.
Thank you.